This blog analyzes public policy issues of concern to progressive Christians such as climate change, labor, health, LGBT issues, economics and public and personal finance.

Friday, August 24, 2007

Bankrate: Small houses can be a good fit for many homeowners

[Jay McDonald, writing for Bankrate.com, asks if perhaps we should consider downsizing our houses. I've occasionally joked that I love Americans, but there are a lot of them who would drive main battle tanks if they could ... same goes for houses. Bankrate is an excellent personal finance site that I recommend. On the actual article on Bankrate, there's a nice slideshow of some actual small houses.]

Frustrated with the size of your home? You're not alone.

But instead of feeling cramped, a growing number of Americans are finding they have more home than they want or need.

The reasons are numerous. Baby boomers, 77 million strong, are looking to downsize in retirement. Young home buyers are finding it increasingly difficult to afford or maintain larger homes. Urban land is at a premium. Smaller homes in desirable neighborhoods are scarce or outlawed by covenant. And environmental concerns about a residence's "carbon footprint" have further dampened enthusiasm for spacious showpieces.

That doesn't necessarily mean that smaller times are ahead for everyone. For growing families, some investors, the wealthy or homeowners who just want the room, bigger will most likely continue to be better.

But for homeowners who no longer wish to pay taxes, utilities and insurance on rooms they never use, or who simply find a smaller home more comfortable and aesthetically pleasing, the small-house movement is quietly reinventing the U.S. scale of living.

My shed, my home

In some cases, the small-house trend goes to the extreme Lilliputian end of the scale.

Jay Shafer lives quite comfortably in a 100-square-foot house in Sebastopol, Calif. You may have a tool shed or a master bath about the same size.

Shafer's home is on the small end of a line of compact, ready-made dwellings he designs for his Tumbleweed Tiny House Co. His designs have won numerous awards for energy efficiency and green building. The homes cost between $20,000 and $48,000, excluding land.

Though many customers use them as vacation homes or mother-in-law cottages, there are those smaller-is-better devotees who, like Shafer, simply prefer to live within their means.

Shafer, founder of the Small House Society, says "supersizing" came about when home builders hooked consumers on the one easily quantifiable aspect of every house: its square footage.

"It's true that the cheapest thing you can add onto a house is square footage, and of course the building industry likes to build these things and people are willing to pay a lot for that not-so-expensive addition," he says. "When the housing industry pushed for larger houses back in the '70s and '80s because their profits were leveling out, the banks followed suit. Then the codes followed suit, so it became illegal to build smaller than a certain size."

Americans quickly came to believe that more square footage paid for itself in resale, especially during the run-up of housing prices in the last decade. Since 1970, the average American home has grown from 1,500 square feet to the current average of 2,450 square feet, according to the National Association of Home Builders.

Against that bigger-is-better investor mind-set, smaller homes were either shunned as fixtures from a bygone era or lumped in with mobile homes. Shafer, Alchemy Architects, the Tiny House Co. and others are attempting to change such perceptions about compact living by extolling the virtues of small houses.

Virtues of small houses:

• Energy efficiency: The propane bill to heat Shafer's cabin in frigid Iowa City, Iowa, was less than $170 for the entire winter.• Durability: Tumbleweed houses withstand winds of up to 180 miles per hour.• Expandability: Modular design allows for any necessary growth.• Custom materials: The sky's the limit when it comes to materials. The smaller the house, the easier it is to use cedar, rubber shingle tiles, cork flooring and other materials that would bust the budget of a larger house.Shafer says the small-house movement is growing as more people become dissatisfied with having to pay more for more house than they need.

"Most of the people who are interested tend to be looking at a house more as a home instead of an investment. It's hard to find a small house anymore. There is a demand for them and they're so rare," he says.

What about my stuff?

Ah, stuff. We love it, don't we? Perhaps the biggest obstacle to downsizing, even for Zen monks, is where will I put my stuff? Jim Gauer, author of "The New American Dream: Living Well in Small Homes," has these suggestions:• Kitchen cabinets that go to the ceiling.• Drawers, drawers and more drawers. Put them under beds, in kitchen bases, in bedside tables, inside closets.• Closet systems, such as those available at California Closets and IKEA.• Storage walls, such as those found behind the impossibly pristine minimalist interiors you see in architecture magazines. Often the space behind the floor-to-ceiling panels is shallower than one foot, but useful to hide all sorts of clutter.• Outside storage option. If there is stuff that just won't fit, consider renting a storage locker. It's cheaper than maintaining extra square footage you only use for storage.

The Katrina effect

New York designer Marianne Cusato wasn't out to change the world when she designed the Katrina Cottage. Her goal was to help provide immediate housing to the victims of Hurricane Katrina.

But when Lowe's executives saw Cusato's compact, self-contained cottage at the International Builders Show in 2005, they recognized a solution to the broader need for affordable housing nationwide.

Lowe's partnered with Cusato and made Katrina Cottages available to order at its 29 locations in Louisiana and Mississippi. The one- and two-bedroom bungalows, in four styles ranging from 544 square feet to 936 square feet, are delivered in sections for easy assembly.

The cost: $40 to $50 per square foot, or less than $50,000 for the largest floor plan.

Once word of the Katrina Cottage got out, interested customers lit up Lowe's phone lines. "Surprisingly, we were getting more inquiries other than from the Gulf for mother-in-law houses, beach cottages, mountain homes, guest houses, even as primary residences," says Jennifer Wilson, a spokeswoman for Lowe's. "We've gotten more than 10,000 calls in the past six or seven months from people asking when it's going to be available to them."

So far, Katrina Cottage plans are only available for purchase online for Lowe's customers in the other 48 states. Included is a shopping list of materials that can be ordered through your local Lowe's store to build your own Katrina Cottage.

A major retailer selling prefabricated homes is not without precedent. Sears did it for years. But Cusato says the availability of a durable, new, "right-sized" house touched a nerve with people tired of having to carry the financial burden of oversized homes.

"A lot of times, houses are sold because Realtors convince somebody that it's not necessarily what they may want, but it's what they have to have to resell. So many people are living in houses not because it's the exact house they want but it's the house they need to sell out of," she says.

"It is a failure of the architecture profession that we haven't built better places so the only thing the buyer can do is talk about square footage, because we haven't given them anything else to talk about. It's a failure of urbanism that the Realtors have had to sell architecture that way."

Ultimately, says Cusato, the solution lies in well-built communities where homes can be of a human scale, instead of stretched out of shape in an effort to fit in everything from a fitness room to a movie theater that should be shared by the neighborhood.

"It's the idea of quality over quantity," she says. "Then you don't have to have everything in your house because you have the 'outdoor room,' you have the street, so you can also build smaller."

Downsizing's big challengesBuilding small does have some unique challenges, often starting with the location.

To come up with the home they love, the Texas architect Rick Black and his wife just happened upon a half-lot that was practically unbuildable in their desirable but pricey Hyde Park community. That was just the starting point for the one-bedroom, 980-square-foot modern they built in 2004.

"'We had kind of a difficult time getting the house design appraised to get our construction loan. In terms of size of newer construction, there was nothing comparable for the appraiser to use," Black recalls.

He admits it costs more to get a smaller house; he estimates his home cost between $150 to $180 a square foot, including his "sweat equity." "For a developer, there is no reason to build those precious little jewels," Black says. "It's not rewarded by the market."

But Black contends it's a great way to get the house you really want, without sacrificing resale value. Their home recently appraised at $211,000; he estimates its current market value at more than $250,000.

"Our private clients, they get that," he says. "They don't need to be swayed by profit-taking as their primary motivation."

Contributing editor Jay MacDonald writes from his home in Austin, Texas.